As per the case facts, the appellant challenged Appellate Tribunal for Electricity (APTEL) orders that rejected their appeals and review petition, affirming a state regulatory commission's decision. The dispute centers ...
No Acts & Articles mentioned in this case
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 3480-3481 OF 2020
GUJARAT URJA VIKAS NIGAM
LIMITED & ORS. …APPELLANT(S)
VERSUS
RENEW WIND ENERGY (RAJKOT)
PRIVATE LIMITED & ORS. …RESPONDENT(S)
J U D G M E N T
S. RAVINDRA BHAT, J.
1.The current civil appeals,
1
under Section 125 of the Electricity Act, 2003,
(hereafter, “the Act”) challenge orders of the Appellate Tribunal for Electricity
(hereafter, “APTEL”), dated 06.12.2018 (“first impugned order”)
2
and order
dated 24.07.2020 (“second impugned order”)
3
. The APTEL had, by those
orders, rejected the appeals preferred by the present appellant, and the review
petition, as well. Resultantly, the order of the Gujarat Electricity Regulatory
1 Civil Appeals Nos. 3480 and 3481 of 2020
2 in Appeal No 209/2015
3 in Review Petition No 03/2019
2
Commission (hereafter “the State Commission”), dated 01.07.2015
4
was
affirmed.
2.The first appellant – Gujarat Urja Vikas Nigam Limited (hereafter
“Gujarat Urja”) had approached this court previously challenging the order of
APTEL, which was disposed of by this court
5
granting liberty to it, to seek
review/rectification. Gujarat Urja then preferred a review petition, which was
rejected by APTEL, by the second impugned order. When this appeal was taken
up for hearing, on 14.10.2020, this court had issued notice and stayed the
impugned order of APTEL.
Background
3.Gujarat Urja procures power in bulk on behalf of distribution licensees in
the state of Gujarat; it is an authorized licensee within the meaning of the term
under the Act. The second, third, fourth and fifth appellants are distribution
licensees in the State of Gujarat. The first respondent, Renew Wind Energy
(Rajkot) Pvt Ltd (hereafter “RWE”) is a wind generator which had set up 25.2
MW Wind Turbine Generators at District Rajkot, Gujarat under the Renewable
Energy Certification scheme notified by the Central Electricity Regulatory
Commission (hereafter, “Central Commission”). The second respondent is the
Wind Independent Power Producers Association (hereafter “Association”). The
Respondent No 3, Gujarat Electricity Regulatory Commission (hereinafter “the
4 in petition No 1363/2013
5 Civil Appeal No 1253/2019 by order dated 15.02.2019
3
State Commission”) is the regulatory commission under the Act, for the State of
Gujarat. The fourth respondent, Wish Wind Infrastructure LLP (“Wish Wind”
hereafter) is a wind generator.
4.By Section 86 of the Act
6
, State Commissions discharge several
functions- which include the determination of tariff “for generation, supply,
transmission and wheeling of electricity, wholesale, bulk or retail, as the case
may be, within the State". The tariff determination process should accord with
Sections 62 and 64 of the Act. Section 62, requires “the Appropriate
Commission” (in this case, the State Commission) to determine tariffs in
accordance with the provisions of the Act for – among other purposes, retail
supply of electricity. The State Commissions are also empowered to frame
regulations, under Section 181 of the Act. That power includes the formulation
of the “terms and conditions for determination of tariff Under Section 61".
7
Additionally, the tariff order can be modified or imposed with conditions under
6 The relevant extract of Section 86 is as follows:
"86. Functions of State Commission.-(1) The State Commission shall discharge
the following functions, namely:-
(a) determine the tariff for generation, supply, transmission and wheeling of
electricity, wholesale, bulk or retail, as the case may be, within the State:
……
(b) regulate electricity purchase and procurement process of distribution licensees
including the price at which electricity shall be procured from the generating companies or
licensees or from other sources through agreements for purchase of power for distribution
and supply within the State;
(c) facilitate intra-State transmission and wheeling of electricity;
…..
(e) promote co-generation and generation of electricity from renewable sources of
energy by providing suitable measures for connectivity with the grid and sale of electricity
to any person, and also specify, for purchase of electricity from such sources, a percentage
of the total consumption of electricity in the area of a distribution licensee;
…. [..]”
7 Clause 181(2)(zd) of the Act.
4
Section 64(3). The State Commission is guided by the principles specified in
Section 61 of the Act while formulation of the tariff regulations. This court has
held that state commissions as expert bodies have to strike a balance between
various competing concerns and interests while framing such regulations.
8
The
Gujarat State Commission, for a Multi-Year period (also called the “control
period”), frames Regulations for determination of tariff. The state commission
then determines the Multi-Year Tariff Order based on the data available.
Furthermore, Section 64 (6) prescribes that tariff orders “shall continue to be in
force for such period as may be specified in the Tariff Order unless amended or
revoked”. If any party is aggrieved by any conditions of a given Tariff Order, it
can seek its amendment or revocation. Orders are also appealable under Section
111 to APTEL, and thereafter to this court under Section 125 of the Act. Tariff
Orders under Section 64 of the Act are quasi-judicial in nature and ipso facto
binding on the parties unless amended or modified through law.
5.On 29.01.2010, the Central Electricity Regulatory Commission (Terms
and Conditions for Recognition and issuance of Renewable Energy Certificate
8Kerala State Electricity Board & Anr v. Principal Sir Syed Institute for Technical Studies, 2020 7 SCR 885:
7. [..] “While fixing tariff, the Commission cannot show undue preference to any
consumer of electricity. The Commission, however, is vested with the power to prescribe
differential rates according to the consumers' load factor, power factor, voltage, total
consumption of electricity during any specified period of time at which supply is required. So
far as fixing different rates for these two categories of the educational institutions, these
factors did not come into play. The other permissible differentiating factors are geographical
position of any area, the nature of supply and the purpose for which the supply is
required. As regards this set of differentiating factors, the tariff advantage for government
run and aided educational institutions do not appear to be based on geographical position or
nature of supply. The Commission however has justified the classification of the aforesaid
two sets of tariffs on the basis of purpose for which supply is required by the consumers.”
5
for Renewable Energy Generation) Regulations, 2010 (hereafter “REC
Regulations 2010”) were framed by the Central Commission for the
development of a power market for non-conventional sources of energy by the
issuance of tradable and saleable credit certificates (hereafter “RECs”).
Regulation 5 of the said REC Regulations 2010 provides for the required
eligibility for the renewable generators for participating in the RE Certificates:
"5. Eligibility and Registration for Certificates:
(1) A generating company engaged in generation of electricity from
renewable energy sources shall be eligible to apply for registration
for issuance of and dealing in Certificates if it fulfills the following
conditions:
a. it has obtained accreditation from the State Agency;
b. it does not have any power purchase agreement for the capacity
related to such generation to sell electricity at a preferential tariff
determined by the Appropriate Commission; and
c. it sells the electricity generated either
(i) to the distribution licensee of the area in which the eligible entity is
located, at a price not exceeding the pooled cost of power purchase of
such distribution licensee, or
(ii) to any other licensee or to an open access consumer at a mutually
agreed price, or through power exchange at market determined price.
Explanation. - for the purpose of these regulations 'Pooled Cost of
Purchase' means the weighted average pooled price at which the
distribution licensee has purchased the electricity including cost of
self generation, if any, in the previous year from all the energy
suppliers long-term and short-term, but excluding those based on
renewable energy sources, as the case may be."
6.The objective of the REC Regulations 2010 was to separate the physical
electrical component and the environmental (renewable) component of the
energy for issuance of RECs. This was an alternate mechanism developed for
the sale of renewable energy at a preferential tariff to any licensee or directly to
any consumer. The REC Regulations 2010 aimed at selling the renewable
component through the RE Certificates containing promotional benefits of
6
renewable energy while the physical electrical component was sold as any other
conventional electricity. The REC Regulations 2010 also provided that
generators based on the REC mechanism had the option to sell physical energy
to the distribution licensee at a "price not exceeding the Average Pooled Power
Purchase Cost” (hereinafter as “APPC”) of the distribution licensee
9
. This was
to ensure that generators did not benefit twice over, by selling RECs and also
selling physical energy at higher promotional tariffs or taking concessional
benefits from the concerned distribution licensee.
7.Under the REC Regulations 2010, distribution licensees were not obliged
to purchase the physical component of electricity from renewable energy
generators set up under the REC mechanism since such REC based generators
had alternative options with regard to the physical component of electricity,
namely, (i) sale of electricity power exchanges (ii) wheeling of power for sale to
third parties at mutually agreed rates or (iii) wheeling of power for their own
consumption. In the case of the sale of the physical component of electricity, the
price for the electrical component could not exceed average pooled cost of the
distribution licensees. The regulations also provided that the generators (of
renewable energy) were not eligible for any benefits including banking
facilities, exemption from payment of cross subsidy surcharge etc. amongst
other things. The stated promotional benefits were applicable only in terms of
trading and selling of the RE Certificates.
9 Regulation 5(1)(c) of REC Regulations 2010.
7
8.The REC Regulations 2010 provided for floor price and forbearance price
i.e. minimum price and maximum price respectively at which RECs could be
traded in the power exchange. Those prices i.e. floor price and the forbearance
prices were to be determined by the central commission for the entire country.
9.In the present case, the State Commission by its order
10
determined the
tariff for procurement of power by distribution licensees from wind energy
generators and also ruled on other commercial issues for wind energy
generators set up under a preferential tariff mechanism. The order provided for
a preferential levelized tariff of 3.56 per kWh for the supply of energy to the
₹
distribution licensee for meeting it’s Renewable Power Purchase Obligation
(RPO). The “control period” of the Order [dated 30.1.2010] was for the period
11.08.2009 to 10.08.2012
11
. The order, inter alia, also provided the following
promotional benefits for wind generators set up for third party sale under a
preferential mechanism:
(a) Exemption from cross subsidy charges for the sale of wind energy to
open access users in the State.
(b) Payment for excess (over and above that set off against monthly
consumption in the 15 minutes time block) would be treated as a sale to
10 Dated 30.01.2010 in Order No 1/2010
11 The relevant provision of the Order reads as follows:
“2.2 Control period The Commission had, vide its Order No.2 of 2006 dated 11th
August,2006, determined the Wind Energy Tariff for a period of three years, i.e. upto 10th
August,2009. The draft for the present order was published on 17.05.2009 and it was
proposed to be effective from 1st July, 2009.However, some of the objectors suggested that
the present order be made effective from the end of previous control period. Since the
previous control period expired on 10th August, 2009, the Commission decides that the
control period for this order will be 3 (three) years w.e.f. 11th August, 2009.”
8
the distribution licensee concerned at a rate of 85% of the preferential
tariff determined by commission for such renewable energy sources.
10.On 17.04.2010, the State Commission notified Gujarat Electricity
Regulatory Commission (Procurement of Energy from Renewable Sources)
Regulations, 2010 (hereafter “State Regulations”). The State Regulations
provided for the percentage of total consumption that distribution licensees were
to purchase from RPOs and further recognized that RPO could be fulfilled by
the purchase of such RECs. Further, obligated entities could fulfil their
renewable purchase obligation through two sources:
(a) Purchase of renewable energy directly (at preferential tariff
determined by State Commission); and
(b) Purchase of RECs at a market price between Floor Price and
Forbearance price determined by Central Commission
11.A Power Purchase Agreement (hereafter “PPA”) in terms of the REC
Regulations 2010, was entered into between the Gujarat Urja and the wind
power developers (hereafter, “WPDs”) including respondent RWE on
29.03.2012. The agreement provided for a ceiling on tariff at ₹ 2.64 per unit for
25 years. In addition to the tariff, WPDs were eligible for the issue of RECs for
each unit of electricity generated and supplied by them to the appellants. The
alternate route available for the WPDs (such as RWE, Wish Wind etc.) at the
time of entering into the PPA was to sell electricity at a promotional tariff of ₹
3.56 per unit - as determined by the State Commission. By choosing the option,
9
the WPDs were ensured tariff at ₹ 2.64 per unit plus tradable RECs whose price
was determined on the basis of the “weighted average pooled price”
12
.
Distribution licensees were enabled to adjust such quantum of power purchased
towards RPO specified under Section 86(1)(e) of the Act. Thus, the interests of
both segments of the industry were taken care of.
12.The State Commission by its order dated 08.08.2012
13
determined the
tariff at which the power could be procured by the distribution licensees and
others from wind power projects commissioned in the control period from
11.08.2012 to 31.03.2016.
13.On 11.07.2013, Central Commission amended the REC Regulations 2010
(hereafter “Second Amendment”) and replaced "at a price not exceeding pooled
cost of the power purchase “with" at the pooled cost of power purchase"
14
along with the relevant statement of reasons for the said amendment. It was
clarified in the amendment that PPAs already executed prior to this amendment
at a tariff lower than APCC would not be affected. The first two respondents
were aggrieved by the order of the Central Commission. They filed a petition
15
12 See Explanation to Regulation 5 of the REC Regulations 2010 which defines average
pooled price as follows:
“the weighted average pooled price at which the distribution licensee has purchased
the electricity including cost of self-generation, if any, in the previous year from all the
energy suppliers long-term and short-term, but excluding those based on renewable energy
sources, as the case may be.”
13 in Order No. 2/2012
14 The relevant amendment to Regulation 5 (c), reads as follows:
“(2) In sub-clause (c) of clause (1) of Regulation 5 of the Principal Regulations, the
words "at price not exceeding the pooled cost of the power purchase of such distribution
licensee" shall be substituted with the words "at the pooled cost of power purchase of such
distribution licensee as determined by the Appropriate Commission".”
15 Petition No. 1363 of 2013
10
before the State Commission arguing that the terms of the PPA had to be
changed in view of the change in the REC regulations. This petition was
allowed by the State Commission directing that the order of the Central
Commission was general and was therefore applicable to all similarly situated
wind power generators. Aggrieved by the order of the State Commission,
Gujarat Urja had preferred an appeal
16
before APTEL. This appeal was rejected
by APTEL by order dated 06.12.2018. The appellants preferred review petition
against APTEL’s order rejecting their appeal against State Commission’s order;
that too was dismissed by APTEL vide order dated 24.07.2020.
Arguments of the Appellant
14.The learned senior counsel for the appellant, Mr. C.A. Sundaram
submitted that governing regulations for the PPAs in question were the CERC
Regulations 2010. Therefore, the State Commission had no jurisdiction to
decide the tariff contrary to the agreement. Further, counsel argued that Central
Commission itself has clarified by the Second Amendment that in respect of
PPAs entered into prior to 11.07.2013, tariffs mutually agreed upon between the
parties would be valid for the entire duration of the PPA (i.e. 25 years) and they
could not be substituted or re-determined by the State Commission. It was
further argued that had the appellants known about the APPC on year-on-year
basis at the time of signing the agreement, they would not have adopted the
REC mechanism but instead would have availed a different method whereby
16 Appeal No. 209/2015
11
prices were fixed and appellants would have been entitled to RPO benefits as
well.
15.Reliance was placed on this court’s judgment in Gujarat Urja Vikas
Nigam Limited v. Solar Semi-Conductors Power Limited Company (India)
Private Limited
17
to argue that if the State Commission re-determines the tariff
amongst the parties, then the aggrieved party cannot be compelled to continue
the said agreement or enter into a new agreement on such increased tariff.
16.The appellants further submitted that State Commission had no
jurisdiction to reopen the PPA as the same was entered into in terms of the REC
Regulations 2010 that was framed by the Central Commission and was within
its exclusive jurisdiction. Moreover, it was argued that the appellants would fail
in their duty towards their consumers if they cannot negotiate for a lower tariff
or if they agree to purchase power at a higher tariff despite the availability of
power at a lower tariff. In such an event, the higher cost of procurement of
power so imposed would be ultimately passed on to the consumers which would
be contrary to a specified public interest, under the Act.
17.The learned senior counsel argued that the definition of the “APPC”
cannot be relied upon in the present case
18
and the PPA in question provided for
a tariff. There was consequently no bar in any law or regulations for the parties
17 (2017) 14 SCR 115
18 APPC as clause 1.1 of the PPA is defined as:
"Average Power Purchase Cost" means the weighted average pooled price at which the
distribution licensee has. Purchased the electricity including cost of self-generation, if any, in the
previous year from all the energy suppliers long-term and short-term; but excluding those based on
renewable energy sources, as the case may be. Further, for this agreement, Average Power Purchase
Cost for the term of the agreement shall be as per Article No. 5.2
12
to agree to such tariff and in fact, REC Regulations 2010 itself recognized that
the PPA can be “at a price not exceeding the pooled purchase cost”. Likewise,
for the sale of such power to customers or the licensees, reference is made to
“mutually agreed price” and therefore reference to “mutually agreed price” can
mean that price can also be a fixed price and need not mean that it has to be
dynamic and varying every year.
18.It was argued that the interpretation placed by APTEL is not founded on
any express provision in the regulations, or anything arising out of necessary
implication. The change in regulations, unless made specifically operable for a
prior period, cannot be construed to be retrospective. Thus, contracts concluded
prior to the entered into prior to the amendment [in 2013] cannot be governed
by amended provisions. Doing so would not only be contrary to the express
terms of the amended regulations but would also be contrary to the terms of the
PPA which do not accommodate or provide for such change in regulations.
19.The appellants further urged that the PPA was consciously entered into
by the respondents on 29.03.2012, which was before the state commission’s
tariff order dated 08.08.2012. The PPAs were signed by the respondents before
11.07.2013, (when the amendment was made to the REC regulations)
voluntarily without any reservation. The terms of the PPA were binding and
enforceable, unaffected by the Second Amendment, which applied
13
prospectively. Learned counsel relied on the clarification by the CERC in the
Statement of Reasons published in this regard.
19
20.It is argued that the National Action Plan on Climate Change and the
Union Ministry of Power resolution dated 28-01-2016 and Tariff Policy
underline the necessity of the co-generation of renewable sources of energy,
progressively, so that it reaches a greater proportion. The policy aims at
increasing investment, and ensuring that viable units generating renewable
energy are set up.
21.It was argued that the PPA was a commercial transaction, freely entered
into between the parties. Neither the appellants nor the first Respondent was
obliged to enter into the PPA nor agree to any specific terms or conditions. In
case the terms were not acceptable, both parties had the freedom to reject the
transaction and seek to sell or buy power through other alternative available
options as provided under the REC Regulations 2010. Further at the time of
signing the PPA, and even thereafter till the filing of the Petition before the
State Commission in the month of December 2013 (i.e. more than one and half
years after the execution of the PPA), the first respondent did not raise any
objections or protest on being allegedly coerced or placed under duress to agree
to the terms and conditions of the PPA. The terms of the PPA were fully in
19 Dated 10.07.2013, which inter alia, stated that
“Some of the stakeholders have suggested to clarify as to whether the PPAs executed at price lower than
APPC would become ineligible under REC Mechanism. It is felt that the tariff for electricity component lower or
higher than APPC may lead to avoidable loss or profit to RE generator. The Commission would like to clarify that the
intention is not to debar the projects that have executed PPA at tariff lower than APPC. This amendment will apply
prospectively and as such will not affect the" already executed PPAs at lower than APPC.”
14
compliance with the provisions of the REC Regulations 2010 as the restriction
in those regulations was for the price not to exceed the Pooled Power Purchase
Cost. The price agreed to between the appellant and Respondent No. 1 was
₹
2.64/- per unit or Pooled Power Purchase Cost of the subsequent year,
whichever was lower.
22.The appellants argue that till 11.07.2013 none of the WPDs/ respondents
raised any issue on the tariff of 2.64/kWh for the entire duration of the PPA.
₹
It
was only on 10.12.2013, the first two respondents filed Petition No.1363/ 2013
before the State Commission claiming that the tariff should be the APPC cost
year-on-year basis instead of a fixed
₹
2.64/kWh. This was contrary to the
decision by CERC on the application of Second Amendment only prospectively
-which is, for PPAs entered on or after 11.07.2013. The state commission by its
order (dated 01.07.2015) allowed the respondent’s petition and further directed
that the order is generic in nature and applicable to all similarly placed WPDs-
which was affirmed by the first impugned order. The appellants argue that the
governing Regulations for PPAs adopting the REC Mechanism are 2010 REC
Regulations and the state commission cannot decide on tariff contrary to the
same. When the Central Commission clarified that for PPAs entered into prior
to 11.07.2013, the tariff mutually agreed is valid for the entire duration of the
PPA (25 years), the state commission and APTEL fell into error in substituting
a new tariff at the instance of the WPDs/Respondents. It is pointed out that Rule
15
8
20
of the Electricity Rules, 2005, notified by the Central Government, is
binding, and specifically provides that tariff determined by the Central
Commission (CERC) shall not be subject to re-determination by the
GERC/State Commission.
23.Learned senior counsel argued that if at the time of signing the PPAs
WPDs-Respondents had sought for tariff at APPC on year-on-year basis, the
appellants would not have entered into PPAs under the REC mechanism route
and would have only adopted the alternate route where the price was fixed and
in addition, the appellants would have been entitled to RPO benefits. This is
also clear as the appellants did not sign any PPAs after the Second Amendment
for procuring power under the REC mechanism. The appellants urge that the
Impugned Order is contrary to the decision of this court in Gujarat Urja Vikas
Nigam Limited v Solar Semi-Conductors Power Company (Pvt) Ltd (Supra)
holding that if the state commission re-determines the tariff, it cannot force the
appellants to continue the PPAs or enter into a contract based on such increased
tariff. Furthermore, it is argued that the principle that WPDs having validly
executed the PPAs cannot seek a modification to the tariff terms and conditions
contained in the PPAs under a prevalent dispensation for an increase in the tariff
or for any other terms and conditions: counsel referred to Transmission
20 Rule 8 reads as follows:
"8. Tariffs of generating companies under section 79. –The tariff determined by the Central
Commission for generating companies under clause (a) or (b) of subsection (1) of section 79 of the Act shall not
be subject to redetermination by the State Commission in exercise of functions under clauses (a) or (b) of sub
section (1) of section 86 of the Act and subject to the above the State Commission may determine whether a
Distribution Licensee in the State should enter into Power Purchase Agreement or procurement process with
such generating companies based ,on the tariff determined by the Central Commission."
16
Corporation of Andhra Pradesh Ltd v Sai Renewable Power Private Limited
(hereafter “Transmission Corporation of Andhra Pradesh Ltd")
21
; Gujarat Urja
Vikas Nigam Limited v EMCO Limited (hereafter “Emco Ltd”)
22
; and Gujarat
Urja Vikas Nigam Limited v ACME Solar Technologies (Gujarat) Pvt Ltd &
Others
23
in support of the above contention.
24.Mr. Sundaram argued – for the appellants that the plea of coercion or
duress or unequal bargaining etc, raised by the WPDs was patently erroneous
for the following reasons: (a) the petition before the state commission was filed
only by the first two Respondents; therefore, it cannot be a ground for alleging
coercion against all WPDs; (b) the allegations by the said two Respondents
were vague and unsubstantiated, and an afterthought as no such plea was raised
till December 2013, i.e., till after the amended CERC Regulations; and (c) as
held by this Court such plea of coercion had to be specifically pleaded and
proved. In this regard, reliance was placed on Transmission Corporation of
Andhra Pradesh Ltd (Supra).
25.It is further argued that there is no Regulation of the state or central
commissions prohibiting a term being incorporated in PPA which permits an
option to either party to switch from REC mechanism to Preferential Tariff
Mechanism. The impugned order had not considered judgments referred to by
the appellants on clauses granting power to one party to cancel the contract. In
21 (2010) 8 SCR 636
22 (2016) 1 SCR 857
23 (2017) 16 SCC 498
17
this regard, reliance is placed on Central Bank of India v Hartford Fire
Insurance Co. Ltd
24
; and Her Highness Maharani Shantidevi P Gaikwad v
Savjibai Haribai Patel & Ors
25
.
Respondents’ Submissions
26.Mr. Shyam Divan and Mr. Dhruv Mehta, learned senior counsels
appearing for the first two respondents urged that State Commission had
jurisdiction in the present case. Reliance was placed on the definitional clause
of the PPA (Article 1.1) to submit that commission meant ‘State Commission’.
It was urged that in terms of the extant regulatory framework, (which provided
for regulatory oversight by the appropriate commission), PPAs executed by
generating companies and distribution licensees necessarily required approval
by the appropriate commission. Firstly, Section 86(1)(b) of the Act specifically
vests the State Commission with the power to regulate the electricity purchase
and procurement process of distribution licensees including the price at which
electricity shall be procured from the generating companies. This provision
empowers the state commission to modify, alter or vary the terms of PPAs, to
ensure their compliance in accordance with the regulatory framework.
Secondly, under the Multi Year Tariff Regulations, 2011 (hereafter “GERC
(Multi Year Tariff) Regulations”) notified by the State Commission, , PPAs are
to be mandatorily approved in order for them to be considered effective and
24 AIR 1965 SC 1288
25 2001 (5) SCC 101
18
enforceable. Learned counsel relied on provisions of the Maharashtra Electricity
Regulatory Commission (Multi Year Tariff) Regulations, 2019, (Regulation
21); Delhi Electricity Regulatory Commission Comprehensive (Conduct of
Business) Regulations 2001 (Regulation 45) and Andhra Pradesh Electricity
Regulatory Commission (Distribution Licensee) Regulations, 2013 (Regulation
36) to support the contention that prior filing and approval of PPAs is necessary
and was not undertaken in this case, which undermines its legal efficacy.
27.It was submitted that pooled purchased cost of power to be taken into
consideration under the REC mechanism has to be the APPC of the previous
financial year- which has to be modified / increased on a regular basis. When
pooled purchase cost increases, the floor price of REC will decrease as the floor
price and forbearance price of RECs are subject to fluctuation, at the end of
each control period. Thus, wind power projects under the REC mechanism will
be viable, only when the realization from the power component increases to
compensate for the reduction in prices of RECs. It was submitted that if the
APPC computed is lower than what has been taken by the CERC for the
determination of the REC price band, there could be a viability gap problem for
RE generators under the REC mechanism, especially in cases where the price
discovered in the power exchange is closer to the floor price.
28.It was further submitted that the Second Amendment to REC regulations
specifically replaced the words “at a price not exceeding” to “at the pooled
cost”, which meant that the cost of electricity purchased could neither be lower
19
nor higher than the power purchase cost. Counsel further placed reliance on
Statement of Reasons dated 10.07.2013 issued by the Central Commission
regarding the Second Amendment to contend that REC contracts cannot be
fixed price contracts as they would affect the viability of REC projects as the
price band (floor price / forbearance price) are subject to periodic revision.
Relevant extracts of the said statement of reasons are reproduced below:
“4.3 Analysis and decision
Some of the stakeholders have suggested to clarify as to whether the
PPAs executed at price lower than APPC would become ineligible
under REC Mechanism. It is felt that the tariff for electricity
component lower or higher than APPC may lead to avoidable loss or
profit to RE generator. The Commission would like to clarify that the
intention is not to debar the projects that have executed PPA at tariff
lower than APPC. This amendment will apply prospectively and as
such will not affect the already executed PPAs at lower than APPC.
Regarding suggestion received that PPA of electricity component
should be a fixed price long term contract (without escalation) since
Commission has assumed fixed price while determining REC price
bands in its methodology, it is clarified that the price band is subject
to periodic revision; hence fixed APPC or long-term contract without
escalation might affect viability of RE Projects. In any case proposed
amendment provides that APPC would be determined by the
Appropriate Commission”
29.Counsel appearing for the association submitted that in terms of the
regulatory framework, PPAs executed by generating companies and distribution
licensees have to be approved by the appropriate commission; and that the PPA
in question was never approved by State Commission nor did the appellants
approach the State Commission for such approval. It was further submitted that
floor price and forbearance price are to be determined guided by various
principles, inter alia, variations in APPC across the states, (which is revised on
20
an annual basis). Hence, the APPC cannot be a static concept else variation in
floor price or forbearance price would lead to under recovery to generators.
30.It was further contended that APPC along with REC pricing, together, are
the tariff determined and approved for the supply of power. That is to say that
APPC and REC pricing are two halves of the same whole which constitutes the
overall tariff which a generating company registered under the REC mechanism
is entitled to receive. APPC along with REC pricing is what was intended to be
incorporated as part of the tariff clause in the PPA. If either of the components
is pegged or capped artificially, and without the approval of the State
Commission, it would lead to a skewed application of the REC mechanism to
the detriment of generating company, leading to under-recovery and unviability
of the RE generator.
31.It was argued that Regulation 9(2) of REC Regulations 2010 provides for
the determination of the floor price (minimum price) and the forbearance price
(maximum price) within which the RECs can be traded in power exchanges.
The floor price and the forbearance are to be determined by CERC for the entire
country guided by various principles, inter alia, variations in APPC across the
States, which is revised on an annual basis. Therefore, if APPC is made static
then variation in Floor Price/ Forbearance price would lead to under recovery to
generators.
32.The APPC to be taken into consideration under the REC mechanism must
be dynamic and must be revised on a regular basis. When APPC is increased,
21
the floor price of REC comes down and vice versa and the same is subject to
change every year. The APPC along with REC pricing, together, are the tariff
determined and approved for the supply of power. In other words, the APPC
and REC pricing are two halves of the same whole, which constitute the overall
tariff which a generating company registered under the REC mechanism is
entitled to receive. APPC along with REC pricing is what was intended to be
incorporated as part of the tariff clause in the PPA. If either component is
pegged or capped artificially, and that too without approval from GERC, the
same would lead to a skewed application of the REC mechanism to the
detriment of the generating company, leading to under-recovery and unviability
of the RE Generator.
33.It was submitted that the tariff in the PPA was in violation of the principal
regulation, which does not contemplate a fixed long-term price/ tariff. It is,
therefore, illegal and had to be aligned with the regulation. The APTEL
correctly aligned the tariff to the regulation. The regulation has not been
challenged and it has the force of statute and it mandates that PPAs should be
aligned to the regulations. Reliance is placed on PTC India Ltd. v. CERC
(hereafter “PTC India”)
26
.
34.Counsel for the third respondent argued that there could not be a tariff
between a generating company and a distribution licensee in a PPA which was
not in line with the CERC Regulations and tariff orders issued by the State
26 (2010) 3 S.C.R. 609
22
Commission. It was further contended that the court cannot enforce a contract
where unequal bargaining power exists amongst the parties. It was further
submitted that State Commission has rightly observed that the fixed tariff of
₹
2.64/unit for a period of 25 years by the parties violates not only the provisions
of the Act but also the National Electricity Policy and tariff policy as notified
under Section 3 of the Act which promotes renewable energy sources through
preferential pricing.
35.Counsel for Wish Wind submitted that it cannot be bound by the onerous
terms of the PPA as it was never approved by the State Commission and thus
not in consonance with the statutory procedure prescribed under the Act.
Learned counsel also submitted that present proceedings are not a case where a
contract has been interdicted by the State Commission but rather where a
contract has been aligned with the relevant regulatory regime in the exercise of
the regulatory power vested by the Act. In response to Gujarat Urja’s argument
that State Commission has no jurisdiction to reopen the PPA, it was submitted
that Section 86(1)(b) of the Act places an obligation upon distribution licensees
to get PPAs (executed by them) approved by the State Commission and in the
present case, state commission never had the opportunity to verify/regulate such
PPAs in accordance with the law.
36.It was also submitted that Section 86(1)(b) of the Act empowers the state
commission to modify, alter or vary the terms of the agreement of PPAs, to
ensure their compliance in accordance with the regulatory framework
23
established under the Act. It was further submitted that taking into consideration
the definition of APPC, it is evident that floor price and forbearance price are
dynamic in nature and APPC being associated with the floor price and the
forbearance price is also required to be determined on a year-to-year basis so
that the guaranteed return to the generators is not affected.
Analysis and Findings
37.The crisis arising out of, and the enormous environmental cost involved
in the continued use of fossil fuels has led governments, world over, to promote
alternative and renewable sources of energy. The rapid growth of renewable
energy over the decade and a half has witnessed that solar and wind power are
now the cheapest sources of energy in many countries in the world. Once green
energy was an expensive alternative, however, it is now helping to reduce
energy bills.
38.The rapidly changing economics of such sources has led, the Union
government to realize that solar and other renewables can potentially transform
the energy landscape, increase access and help India meet its climate change
objectives. Grid transmission capacity has been a barrier; however, distributed
and off-grid solar solutions provide a viable solution for increasing energy
access. Being dependent primarily on cheap coal-based power generation,
traditional thinking on energy has been that increase in renewable energy’s
share of electricity generation would further impair local distribution
24
companies’ poor financial situation. Over the years, India has established a
comprehensive policy and regulatory frameworks to encourage renewable
energy development. India began its development of wind power in the 1990s
and has significantly increased its capacity over the last few years. Compared to
established countries with wind energy capacities like the USA or Denmark,
India is a latecomer. Yet, its support for wind power, through its policies has
resulted in India becoming the producer with the fourth largest installed wind
power capacity, in the world; wind power accounts for 10% of India’s total
installed power capacity. As of February 2023, the installed capacity of wind
power in India was 42,015 megawatts (MW).
27
39.Section 86 of the Act enumerates the functions of state commissions;
Section 86 (1)(e) reads as follows:
“Section 86(1): The State Commission shall discharge the following
functions, namely:
****************** *****************
(e) promote cogeneration and generation of electricity from
renewable sources of energy by providing suitable measures for
connectivity with the grid and sale of electricity to any person, and
also specify, for purchase of electricity from such sources, a
percentage of the total consumption of electricity in the area of a
distribution licensee;”
40.State Commissions have placed significant emphasis on the last part of
this important clause while developing regulations for Distribution Licensees
27 Physical Progress (Achievements) Ministry of New and Renewable Energy, Govt. of
India. https://mnre.gov.in/the-ministry/physical-progress, visited on 06.04.2023 at 20:30
hours.
25
under their jurisdiction. The National Tariff Policy, issued by the Central
Government in terms of Section 3 of the Act states as follows:
“Clause 6.4: Non-conventional sources of energy generation
including co-generation:
(1) Pursuant to provisions of section 86(1)(e) of the Act, the
Appropriate Commission shall fix a minimum percentage for purchase
of energy from such sources taking into account availability of such
resources in the region and its impact on retail tariffs. Such
percentage for purchase of energy should be made applicable for the
tariffs to be determined by the SERCs latest by April 1, 2006.”
By virtue of Regulation 4 (1) of the REC Regulations 2010, there are two
categories of RECs: solar and non-solar. Regulation 4 (2) mandates that “non-
solar certificate shall be sold to the obligated entities to enable them to meet
their obligation for purchase from renewable energy sources other than solar.”
Regulation 5 (1) of the REC regulations (extracted earlier) spells out the
eligibility conditions for renewable energy generating companies to apply and
seek registration for certificates; these are that the company should have: (a)
obtained accreditation from the State Agency; (b) it does not have any power
purchase agreement for the capacity related to such generation to sell electricity
at a preferential tariff determined by the Appropriate Commission; and (c) it
sells the electricity generated either-(i) to the distribution licensee of the area in
which the eligible entity is located, at a price not exceeding the pooled cost of
power purchase of such distribution licensee, or (ii) to any other licensee or to
an open access consumer at a mutually agreed price, or through power exchange
at market determined price. What is meant by “pooled cost or purchase” is
26
elaborated in the Explanation (to Regulation 5) to mean “the weighted average
pooled price at which the distribution licensee has purchased the electricity
including cost of self-generation, if any, in the previous ·year from all the
energy suppliers long-term and short-term, but excluding those based on
renewable energy sources. as the case may be.”
41.The objectives of the REC Regulations 2010 were described in the
judgment of this court, reported as Hindustan Zinc Ltd. v. Rajasthan Electricity
Regulatory Commission,
28
“44. [..] Regulations have been enacted in order to effectuate the
object of promotion of generation of electricity
from renewable sources of energy as against the polluting sources
of energy which principle is enshrined in the Act, the National
Electricity Policy of 2005 and the Tariff Policy of 2006. The
provisions requiring purchase of minimum percentage of
energy from renewable sources of energy have been framed with an
object of fulfilling the constitutional mandate with a view to protect
environment and prevent pollution in the area by utilising renewable
energy sources as much as possible in larger public interest.[..]”
42.The approach of this court, therefore, has to consider the objective of the
policy of promoting non-renewable sources of energy, the purpose of
introducing RECs, and the progressive obligations placed upon licensees, to
ensure that they purchase energy from such “green” or “clean” sources, in a
viable manner. In the present case, the obligation to procure renewable energy,
is located in the Gujarat Electricity Regulatory Commission
(Procurement of Energy from Renewable Sources) Regulations, 2010 (hereafter
28 (2015) 7 S.C.R. 1104
27
the “Renewable Sources Regulations”). Regulation 4 (1) of the said Renewable
sources Regulations reads as follows:
“4. Quantum of Renewable Purchase Obligation (RPO)
4.1 Each distribution licensee shall purchase electricity (in kWh) from
renewable energy sources, at a defined minimum percentage of the
total consumption of its consumers including T&D losses during a
year. Similarly, Captive and Open Access user(s) / consumer(s) shall
purchase electricity (in kWh) from renewable energy sources, at a
defined minimum percentage of his/her total consumption during a
year.
The defined minimum percentages are given below in the Table 1.
If the above-mentioned minimum quantum of power purchase from
solar and other renewable energy sources is not available in a
particular year, then in such cases, additional wind or other energy,
over and above that shown in column 3 and 5, shall be utilized for
fulfillment of the RPO in accordance with column 2.
Provided further that such obligation to purchase renewable energy
shall be inclusive of the purchases, if any, from renewable energy
sources already being made by the obligated entity concerned:
Provided also that the power purchases under the power purchase
agreements for the purchase of renewable energy sources already
entered into by the distribution licensees shall continue to be made till
their present validity, even if the total purchases under such
agreements exceed the percentage as specified hereinabove.”
28
43.In terms of Regulation 9 (1) of the Renewable Sources
Regulations, if an obligated entity
29
(such as the present
appellant) does not fulfil the renewable purchase obligation as
provided in the regulations during any year and also does not
purchase the certificates, the State Commission may direct the
obligated entity to deposit into a separate fund, to be created
and maintained by such obligated entity, such amount as the
State Commission may determine. Thus, obligated entities,
(distribution licences included) had to take steps to
progressively increase the purchase of power from renewable
energy sources. To incentivize this, flexibility was granted; the
power generators could either have the tariff fixed, according
to the State Commission’s Tariff determination order, or adopt
another mechanism, i.e., the one contemplated in the REC
Regulations.
44.The relevant conditions and stipulations set out in the PPA in this case,
are extracted below:
“RATES AND CHARGES
5.1 Monthly energy charges: the GUVNL shall pay for the delivered
energy as certified by the SEA of Gujarat SLDC, for the term of this
agreement from the commercial operation date of signing of power
purchase agreement whichever is later, to the power producer every
month. The tariff payable by GUVNL for energy purchased shall be as
per clause 5.2 herein.
29 An “obligated entity” is defined in Regulation 2 (k) as “the entity mandated under
clause (e) of subsection (1) of section 86 of the (Electricity) Act to fulfil the renewable
purchase obligation and identified under clause 3 of these Regulations.
29
5.2. GUVNL shall pay a fixed rate of Rs. 2.64 per KWh (average
power purchase cost for previous FY i.e. 2010-11) during the term of
this agreement for delivered energy certified by Gujarat SLDC in the
monthly State energy Account (SEA):
a) In case in any subsequent FY the APPC goes below the APPC goes
below the APPC of FY 2010-11, the applicable tariff for ensuring. FY
shall be such lower APPC of the previous year.
b) Power producer and power procurer both have option to switch
over from REC mechanism to preferential tariff after 10 years from
commissioning of the 23.10 MW WTGS. In case either party exercises
the option, the tariff shall be Rs. 3.56 per KWh (as determined by
GERC through order no. 1 of 2010 dated 30.1.2010) for balance term
of the agreement. Further, power producer shall submit documentary
evidence to GUVNL for de-registration of wind project from REC
mechanism in case either party ·exercise. Option to switch over from
REC to preferential tariff.
5.3 For each KVRAH drawn from the grid, the Company shall pay at
the rate of as determined by the Commission to GETCO from time to
time for each KARH drawn.
5.4 Till the intra-State ABT is implemented, the certificate issued by
GEDA for generation share of wind turbine shall be acceptable for
monthly energy bill. The other provisions of intrastate ABT and Open
access regulations appearing in this agreement shall also be
applicable only after the intra-State ABT is implemented.
************************ ****************
ARTICLE 9
TERM, TERMINATION AND DEFAULT
9.1 Term of the agreement: This agreement shall become effective
upon the executive and delivery thereof by the parties hereto and
unless terminated pursuant to other provisions of the agreement, shall
continue to be in force for such time until the completion of a period
of 25 (twenty five) years from the commercial operation date.”
………………………..
Did the PPA in the present case, require prior approval of the state
commission
30
45.RWE and the other respondents urge that the PPA was unenforceable
because it was not approved by the State Commission. This court is of the
considered view that the argument is unmerited and insubstantial.
46.The State Commission’s regulations (Renewable Sources Regulations)
relating to procurement of energy from Renewable Sources, provides, inter alia,
pertinently, as follows:
“3. Applicability of Renewable Purchase Obligation: These
Regulations shall apply to: (1) Distribution licensee (2) Any other
person consuming electricity
(i) generated from conventional Captive Generating Plant having
capacity of 5 MW and above for his own use and / or
(ii) procured from conventional generation through open access and
third party sale.”
47.From a reading of the above provision, it is evident that there was never
any provision, which mandated prior approval by the state commission, of PPAs
entered into, by parties, in exercise of their free choice, in relation to renewable
energy sources. As a matter of fact, in the case of renewable power, the state
commission had approved a model PPA. Further, the tariff terms and conditions
to the extent decided are by the Central Commission and not by the State
Commission. These are incorporated in the model PPA. Neither the
commission, nor the contesting respondents, during the hearings in the present
appeals, were able to point out any provision in the PPA in the present case,
which conflicted with any provision of the model PPA, or any express
regulation. Furthermore, it was not established how in the absence of any
31
reference to the Multi Year Tariff Regulations, they were applicable to PPAs
relating to renewable energy sources.
48.This court is also of the considered view, that in the absence of specific
norms prescribing prior approval of PPAs like in the case of provisions of
Regulation 21 of the Maharashtra Electricity Regulatory Commission (Multi
Year Tariff) Regulations, 2019; Regulation 45 of the Delhi Electricity
Regulatory Commission Comprehensive (Conduct of Business) Regulations
2001 and Regulation 36 of the Andhra Pradesh Electricity Regulatory
Commission (Distribution Licensee) Regulations, 2013, the respondent’s
arguments on this aspect cannot be accepted. In these circumstances, the
findings of APTEL, not based on any stipulated obligations under provisions of
the state regulations, requiring approval of the state commission, for its
operation, cannot be sustained.
Whether change in the REC Regulations obliged revision of the PPA in this
case
49.In Emco Ltd (supra), the parties had entered into a PPA on 09.12.2010 for
the sale and purchase of solar power. The PPA was modified on 07.05.2011 in
view of certain difficulties in the location of the unit. When the PPA was
entered into, the tariff order was applicable. The PPA was thus entered into
during the control period of the first tariff order. The second tariff order came
into force on 27.01.2012. It granted certain concessions to purchase and availing
of the benefit of accelerated depreciation under the income tax and did not grant
32
such benefits to purchasers and tariff payable to power purchasers which did not
avail of the benefit of accelerated depreciation. The respondent Emco had not
availed accelerated depreciation. Despite that, it approached the Gujarat State
Commission, seeking a determination of the tariff afresh, contending that the
position had changed. This court noticed that the power purchaser had
contended that notwithstanding that it entered into a PPA during the control
period, it was not obliged to sell power to the distributor for a price specified in
the PPA and was legally entitled to seek fixation of separate tariff. The Court
rejected the contention after noticing the arguments. The relevant extracts of the
judgment (In Emco Ltd.) are as below:
“11. The case of the first respondent is that notwithstanding the fact
that it entered into a PPA during the "control period" specified in the
First Tariff Order, it is not obliged to sell power to the appellant for
the price specified in Article5.2 of the PPA and is legally entitled to
seek (from the second respondent) fixation of a separate tariff. It is the
further case of the first respondent that under the PPA, the appellant
is under an obligation to procure the power from the first respondent
for a period of 25 years if the first respondent commences the
generation of power within the "control period" and is also obliged to
pay for the power procured by it at the rates specified in Article 5.2 of
the PPA. But the obligation of the first respondent to sell power
generated by it to the appellant at the rates specified in Article 5.2 of
the PPA comes into existence only on the happening of the two
contingencies i.e. the first respondent (i) commencing the generation
of power within the "control period" stipulated under the First Tariff
Order; and (ii) choosing to avail the "benefit of accelerated
depreciation" under the Income Tax Act. According to the first
respondent, the stipulation under the First Tariff Order that the tariff
fixed there under is not applicable to those Projects which "do not get
such benefit, the Commission would on a petition in that respect
determine a separate tariff taking into account all the relevant facts
from not" would only imply that tariff fixed under the First Tariff
Order is not applicable to those Projects/power producers which do
not avail the "benefit of accelerated depreciation" under the Income
Tax Act.
xxxxxx xxxxxx xxxxxx
33
13. We have already noticed that the first respondent did not
commence generation of power within the "control period" stipulated
under the First Tariff Order and also did not avail the "benefit of the
accelerated depreciation" under the Income Tax Act. It is admitted on
all hands that the "benefit of accelerated depreciation" mentioned in
the First Tariff Order and the PPA is the stipulation contained in
Section 32(1)(i) of the Income Tax Act read with Rule 5(1-A) of the
Income Tax Rules. They provide for the method and manner in which
depreciation of the assets of an assessee is to be calculated.
xxxxxx xxxxxx xxxxxx
26. Apart from that, the conclusion of the Tribunal in the instant case
is wrong. First of all the PPA does not give any option to the
respondent to opt out of the terms of the PPA. It only visualises a
possibility of the producer not commissioning its Project within the
"control period" stipulated under the First Tariff Order and provides
that in such an eventuality what should be the tariff applicable to the
sale of power by the first respondent. Secondly, the PPA does not
"entitle" the first respondent to the "tariff as determined by the"
second respondent by the Second Tariff Order. On the other hand, the
PPA clearly stipulates that in such an eventuality:
"Above tariff shall apply for solar projects commissioned on or
before 31-12-2011. In case, commissioning of solar power project is
delayed beyond 31-12-2011, GUVNL shall pay the tariff as
determined
by the Hon'ble GERC for solar projects effective on the date of
commissioning of solar power project or abovementioned tariff,
whichever is lower."
(emphasis supplied)”
50.In Transmission Corporation of Andhra Pradesh Ltd (Supra), the state
commission had, by an order dated 20.06.2001 directed generators of non-
conventional energy to supply power exclusively to the A.P. Transmission
Corporation. Energy developers were not permitted to sell power to third
parties. The Commission also approved the rate prevailing earlier for supply @
2.25/- per unit with a 5% escalation per annum from 1994-1995 being the
₹
base year. The parties entered into PPA after the passing of the Regulatory
Commission’s order. The PPA embodied or reflected the tariff @ 2.25/- per
₹
34
unit with escalation @ 5% per annum having 1994 as the base year to be revised
annually upto 2003-04. After that, the purchase price was to be decided by the
state commission. The stipulation also provided that further review of the
purchase price on the completion of 10 years from the commissioning of the
project would be made.
51.The A.P. Transmission Corporation’s functions devolved upon discoms
by operation of law. In this background, the state commission exercised suo
motu powers to revise non-conventional energy purchase tariffs. The APTEL
rejected the appeal of the A.P. Transmission Corporation. This court held that
once agreements were signed and were enforceable in law, such enforceable
obligations could not be frustrated. The court also negatived the arguments on
behalf of the power generator that they had been subjected to coercion or
duress. The observations of this court in this regard are pertinent in this regard
and are extracted below:
“39. [..] In the present case the order dated 20-6-2001 was fully
accepted by
the parties without any reservation. After the lapse of more than
reasonable time of their own accord they voluntarily signed the PPA
which contained a specific stipulation prohibiting sale of generated
power by them to third parties. The agreement also had a renewal
clause empowering TRANSCO/ APTRANSCO/Board to revise the
tariff. Thus, the documents executed by these parties and their conduct
of acting upon such agreements over a long period, in our view, bind
them to the rights and obligations stated in the contract. The parties
can hardly deny the facts as they existed at the relevant time, just
because it may not be convenient now to adhere to those terms.
Conditions of a contract cannot be altered/avoided on presumptions
or assumptions or the parties having a second thought that a term of
contract may not be beneficial to them at a subsequent stage. They
would have to abide by the existing facts, correctness of which, they
35
can hardly deny. Such conduct, would be hit by allegans contraria
non est audiendus.”
-----------------------------
42. Now, we will proceed to examine the merits or otherwise of the
findings recorded by the Tribunal that the PPAs executed by the
parties were result of some duress and thus, it will not vest the
authorities with the power to review the tariff and other granted
incentives. PPAs were executed prior and subsequent to the issuance
of the order dated 20-6 2001. Different persons executed the contracts
at different times in full awareness of the terms and conditions of such
PPAS. To frustrate a contract on the ground of duress or coercion,
there have to be definite pleadings which have to be substantiated
normally by leading cogent and proper evidence. However, in the case
where summary procedure is adopted like the present one, at least
some documentary evidence or affidavit ought to have been filed
raising this plea of duress specifically.
43. [..] From the record before us, nothing was brought to our notice
to state the plea of duress and to prove the alleged facts which
constituted duress, so as to vitiate and/or even partially reduce the
effect of the PPAs. On the one hand, the Tribunal appears to have
doubted the binding nature of the contracts stating that they contained
unilateral conditions introduced by virtue of order and approval of the
Regulatory Commission, while on the other hand, in para 53 of the
order, it proceeded on the presumption that PPAS are final and
binding and still drew the conclusion that the Regulatory Commission
could not revise the tariff. Even in the order, no facts have been
pointed out which, in the opinion of the Tribunal, constituted duress
within
the meaning of the Contract Act so as to render the contract
voidable.”
52.In Gujarat Urja v. Solar Power Company India Pvt. Ltd.
30
(hereafter
“Solar Power Company India Pvt. Ltd”), the issue involved was whether the
State Commission could extend the control period. One of the arguments made
was that having regard to the terms of the PPA, the exercise of such power to
extend the control period was not available under the statute. The Court (per
Kurian Joseph, J) referred to Gujarat Urja Vikas Nigam Ltd. v. Tarini
Infrastructure Ltd.
31
wherein it was held that:
30 (2017) 14 S.C.R. 115
31 (2016) 5 S.C.R. 990
36
“10. While Section 61 of the Act lays down the principles for
determination of tariff, Section 62 of the Act deals with different kinds
of tariffs/charges to be fixed. Section 64 enumerates the manner in
which determination of tariff is required to be made by the
Commission. On the other hand, Section 86 which deals with the
functions of the Commission reiterates determination of tariff to be
one of the primary functions of the Commission which determination
includes, as noticed above, a regulatory power with regard to
purchase and procurement of electricity from generating companies
by entering into PPA(s). The power of tariff determination/fixation
undoubtedly is statutory and that has been the view of this Court
expressed in paras 36 and 64 of A.P. TRANSCO v. Sai Renewable
Power (P) Ltd. This, of course, is subject to determination of price of
power in open access (Section 42) or in the case of open bidding
(Section 63). In the present case, admittedly, the tariff incorporated in
PPA between the generating company and the distribution licensee is
the tariff fixed by the State Regulatory Commission in exercise of its
statutory powers. In such a situation it is not possible to hold that the
tariff agreed by and between the parties, though finds mention in a
contractual context, is the result of an act of volition of the parties
which can, in no case, be altered except by mutual consent. Rather, it
is a determination made in the exercise of statutory powers which got
incorporated in a mutual agreement between the two parties involved.
********** ***********
This Court in Solar Power Company India Pvt. Ltd(Supra)further
observed that:
35. This Court should be specially careful in dealing with matters of
exercise of inherent powers when the interest of consumers is at stake.
The interest of consumers, as an objective, can be clearly ascertained
from the Act. The Preamble of the Act mentions "protecting interest of
consumers" andSection61 (d) requires that the interests of the
consumers are to be safeguarded when the appropriate Commission
specifies the terms and conditions for determination of tariff. Under
Section 64 read with Section 62, determination of tariff is to be made
only after considering all suggestions and objections received from
the public. Hence, the generic tariff once determined under the statute
with notice to the public can be amended only by following the same
procedure. Therefore, the approach of this Court ought to be cautious
and guarded when the decision has its bearing on the consumers.
36. Regulation 85 provides for extension of time. It may be seen that
the same is available only in two specified situations - (i) for extension
of time prescribed by the Regulations, and (ii) extension of time
prescribed by the Commission in its order for doing any act. The
control period is not something prescribed by the Commission under
37
the Conduct of Business Regulations. The control period is also not an
order by the Commission for doing any act. Commissioning of a
project is the act to be performed in terms of the obligation under the
PPA and that is between the producer and the purchaser viz.
Respondent 1 and appellant. Hence, the Commission cannot extend
the time stipulated under the PPA for doing any act contemplated
under the agreement in exercise of its powers under Regulation 85.
Therefore, there cannot be an extension of the control period under
the inherent powers of the Commission.
37. The Commission being a creature of statute cannot assume to
itself
any powers which are not otherwise conferred on it. In other words,
under the guise of exercising its inherent power, as we have already
noticed above, the Commission cannot take recourse to exercise of a
power, procedure for which is otherwise specifically provided under
the Act.”
53.The concurring view expressed by Banumathi J, crucially held that:
“Sanctity of power purchase agreement
22. It is contended that Section 86(1)(b) of the Act empowers the State
Commission to regulate the price of sale and purchase of electricity
between the generating companies and distribution licensees and the
terms and conditions of the PPA cannot be set to be inviolable. Merely
because in PPA, tariff rate as per Tariff Order, 2010 is incorporated
that does not empower the Commission to vary the terms of the
contract to the disadvantage of the consumers whose interest the
Commission is bound to safeguard. Sanctity of PPA entered into
between the parties by mutual consent cannot be allowed to be
breached by a decision of the State Commission to extend the earlier
control period beyond its expiry date, to the advantage of the
generating company, Respondent 1 and disadvantage of the appellant.
Terms of PPA are binding on both the parties equally.
66. In Gujarat Urja Vikas Nigam Ltd. v. EMCO Ltd., facts were
similar and the question of law raised was whether by passing the
terms and conditions of PPA, the respondent can assail the sanctity of
PPA. This Court held that power producer cannot go against the
terms of the PPA and that as per the terms of the PPA, in case, the
first respondent is not able to commence the generation of electricity
within the "control period" the first respondent will be entitled only
for lower of the tariffs.”
38
54.Similarly, in Bangalore Electricity Supply Co. Ltd. vs. Konark Power
Projects Ltd. & Ors
32
this court held as follows:
“13. The contention that Under Regulations 5.2, 5.3, 5.4 of the 2004
Regulations as well as Sections 61 and 62 of the Electricity Act, power
is vested with the Commission to vary the tariff is concerned, such
power specifically provided for in the said Regulations will only
operate prior to fixing of the tariff once the concerned Power
Purchase Agreements are ultimately concluded and the terms are
agreed between the parties under the Power Purchase Agreements,
thereafter, in our considered opinion, Regulation 5.1 of the 2004
Regulations alone would apply in the case of the parties before us.
Consequently, there was no scope for the Commission to vary the
tariff agreed between the parties under the approved Power Purchase
Agreement.”
55.Section 61 of the Act enacts the basis for tariff determination. On the
other hand, Section 62 is concerned with the fixation of various other charges
and tariffs. Section 64 lists the manner and procedure for tariff determination by
the Commission. Section 86 lists the functions of the Commission and reiterates
the determination of tariffs to be a prominent task of the commission. Tariff
determination no doubt, comprehends the exercise of regulatory function,
including purchase, sourcing, procurement of electricity from generators, by
distribution and other licensees, and their sales. This part involves generating
companies entering into PPA(s) with procuring entities or licensees. Tariff
fixation is a statutory function. Yet, by virtue of Section 42, it is subject to open
access determination of the price of power, and subject to Section 63 wherever
it involves open bidding. In the facts of this case, the PPA incorporated a tariff
between the respondents and Gujarat Urja constituted the tariff fixed by the
32 (2016) 13 SCC 515
39
State Regulatory Commission in the exercise of its statutory powers. The issue
and sale of RECs, constituted an important part of that bargain, between the two
parties, based on the assessment of their commercial interest.
56.The important feature of the REC Mechanism is that in it, WPDs (i.e.
respondents) had to sell power to distribution licensees at a mutually agreed
price, not exceeding the Average Power Purchase Cost ('APPC') of the
DISCOMs, (such as Gujarat Urja). The WPDs were entitled to the additional
benefit of Renewable Energy Certificates issued to it which could be traded in
Power Exchange for a price. The consideration payable to WPDs consisted of
firstly, a mutually agreed power Component and secondly a green component
through RECs traded in the Exchange. The alternative to the WPDs was to sell
to licensees at a preferential tariff, determined by the state commission. In the
latter event, WPDs were not entitled to the additional benefit of the green
component, which was the tradable RECs the sale of which would have led to
increased revenues. The respondent WPDs chose the REC mechanism, while
entering into PPAs in these cases, with Gujarat Urja. The PPAs entered by
WPDs provided for the fixed tariff of ₹2.64/kWh for the entire term (25 years),
as mutually agreed (Article 5.2 of PPA). WPDs were entitled to and were
trading RECs in the power exchange, deriving extra monetary benefits: which,
at the relevant period was ₹ 1.50/kWh (floor price at the time of signing of
PPA). The Preferential Tariff determined by the state commission, for WPDs
not opting for the REC Mechanism was ₹ 3.56/kWh. The WPDs were not
40
entitled to any additional REC benefits, had they adopted the preferential tariff
route.
57.The respondents successfully complained before the State Commission,
and APTEL, that the PPA, which they had entered into with Gujarat Urja,
whereby the tariff was fixed at 2.64/kWh (with the price of RECs sold by
₹
them) was, in the long run, less beneficial than
₹
3.56/kWh. During the hearing,
it was sought to be urged that the cost of RECs in the exchange, had been
decreasing, whereas the preferential tariffs had risen. On this aspect, Regulation
9 of the REC Regulations 2010 prescribes the price determination mechanism
for RECs in the power exchange. Proviso to Regulation 9 (1) of the REC
Regulations 2010 empowers the central commission, in consultation with the
Central Agency and the Forum of Regulators, to provide the floor price and
forbearance price separately for solar and non-solar certificates. This provision
is important because it enables regulatory intervention in the public interest: if
the price went below a certain limit, the floor price was to be prescribed, to take
care of the interests of generators- like the respondents; if the price went too
high, a forbearance price could be fixed, to take care of the interests of the
consumers and distributors. By Regulation 9 (2) of the REC Regulations 2010,
the Central Commission, was to be guided, in determining the floor and
forbearance price, by diverse factors, such as (a) variation in cost of generation
of different renewable energy technologies falling under solar and non-solar
41
category, across states in the country; (b) variation in the Pooled Cost of
Purchase across States in the country; (c) Expected electricity generation for
non-renewable energy sources [including (i) expected renewable energy
capacity under preferential tariff (ii) expected renewable energy under
mechanism of certificates] (d) Renewable purchase obligation targets set by
various State Commissions. By virtue of Explanation to Regulation 5 (1) of the
REC Regulations, “the weighted average pooled price at which the distribution
licensee has purchased the electricity including cost of self-generation, if any,
in the previous year from all the energy suppliers long-term and short-term, but
excluding those based on renewable energy sources, as the case may be.” An
important factor which cannot be lost sight of is that all the respondent’s WPDs
were registered, under the REC Regulations, based on the state commission’s
tariff order, of 2010. It is undisputed, that to register under the REC Regulations
2010, an entity (such as WPDs) had to be (a) accredited, with a State Agency
[(defined by Regulation 2 (n) of the REC Regulations as an agency “designated
by the State Commission to act as the agency for accreditation and
recommending the renewable energy projects for registration”) and an entity
“not having any power purchase agreement for the capacity related to such
generation to sell electricity at a preferential tariff determined by the
Appropriate Commission].
58.Furthermore, the state commission, in its tariff order, dated 30.01.2010
(which was operative for three years, with the control period beginning from
42
10.08.2009) while determining the preferential tariff, had observed that it would
apply for 25 years:
“The Commission, therefore, determines the tariff for generation of
electricity from wind energy projects at Rs.3.56 (constant) for its
entire project life of 25 years i.e. from the first year to the twenty fifth
year. This tariff shall be applicable for purchase of wind energy by
Distribution Licensees/ other entities for complying with the
renewable power purchase obligations specified in the regulation by
commission from time to time. This tariff is applicable to wind energy
projects which commission brand new wind energy plants and
equipments on 11th August, 2009 onwards.”
59.In the present case, the PPA was entered into by the parties on
29.03.2102, within the control period stipulated in the tariff order of 2010. The
change in the REC Regulations 2010, whereby the Explanation to Regulation 5
was amended resulted in a change. The pre-existing clause that the power would
be "at a price not exceeding pooled cost of the power purchase" was altered to
"at the pooled cost of power purchase". This change, was through the Second
Amendment (to the REC Regulations), carried out on 10.07.2013. It is a matter
of record, that for the period between 29.03.2102 and 10.07.2013 - and indeed,
after the Second Amendment, no difficulty was experienced in the pricing
mechanism agreed by the parties, under the PPA. It was on 10.12.2013 that the
respondent WPD approached the state commission for re-determination of
tariff. Clearly, this was an opportunistic attempt to derive advantage from the
change, brought about by the Second Amendment, and seek to have it applied to
an existing contract, which cannot be countenanced. In view of these reasons, it
43
is held that the reasoning of APTEL, and the State Commission cannot be
upheld.
Applicability of the Second Amendment to pre-existing contracts- the general
law
60.Power Purchase Agreements are essentially not statutory contracts;
however, certain terms contained in those contracts, are regulated by law, i.e.
applicable regulations, under the Act. The PPA between a generating company
or, as in this case, a wind generator, and a distribution licensee, such as Gujarat
Urja, is the outcome of a carefully considered decision, whereby the parties,
after due deliberations and negotiations, agree on terms, which are based on
existing law and regulations. Aside from contending that the PPA had to be
approved, (which this court has rejected in a previous part of this judgment) but
was not, the respondents also urge, independently, that the Second Amendment
had necessitated re-visiting of the terms of the PPA, relating to the payment of
average pooled power purchase cost, given that the amendment mandated that
the power would be at the pooled power purchase cost, as opposed to the
previous provision, which stated that the cost would not exceed the pooled
power purchase cost.
61.Regulation 1 (2) of the Second Amendment clearly provides that the
amendments were to come into force from the date of their publication in the
Official Gazette, which is 10
th
July, 2013. Furthermore, the Statement of
44
Reasons, accompanying the Second Amendment, clarified that existing PPAs
were not affected:
“Some of the stakeholders have suggested to clarify as to whether the
PPAs executed at price lower than APPC would become ineligible
under REC Mechanism. It is felt that the tariff for electricity
component lower or higher than APPC may lead to avoidable loss or
profit to RE generator. The Commission would like to clarify that the
intention is not to debar the projects that have executed PPA at tariff
lower than APPC. This amendment will apply prospectively and as
such will not affect the already executed PPAs at lower than APPC.”
62.The Constitution Bench of this Court, in PTC India (supra) had indicated
that state commissions possess the power to vary existing contracts, especially
PPAs:
“40. [..] To regulate is an exercise which is different from making of
the regulations. However, making of a regulation under Section 178 is
not a precondition to the Central Commission taking any
steps/measures under Section 79(1). As stated, if there is a regulation,
then the measure under Section 79(1) has to be in conformity with
such regulation under Section 178. This principle flows from various
judgments of this Court, which we have discussed hereinafter. For
example, under Section 79(1)(g), the Central Commission is required
to levy fees for the purpose of the 2003 Act. An order imposing
regulatory fees could be passed even in the absence of a regulation
under Section 178. If the levy is unreasonable, it could be the subject-
matter of challenge before the appellate authority under Section 111
as the levy is imposed by an order/decision-making process. Making
of a regulation under Section 178 is not a precondition to passing of
an order levying a regulatory fee under Section 79(1)(g). However, if
there is a regulation under Section 178 in that regard then the order
levying fees under Section 79(1)(g) has to be in consonance with such
regulation.
*********
40. [..] One must keep in mind the dichotomy between the power to
make a regulation under Section 178 on the one hand and the various
enumerated areas in Section 79(1) in which the Central Commission
is mandated to take such measures as it deems fit to fulfil the objects
of the 2003 Act. Applying this test to the present controversy, it
becomes clear that one such area enumerated in Section 79(1) refers
to fixation of trading margin. Making of a regulation in that regard is
not a precondition to the Central Commission exercising its powers to
fix a trading margin under Section 79(1)(j), however, if the Central
45
Commission in an appropriate case, as is the case herein, makes a
regulation fixing a cap on the trading margin under Section 178 then
whatever measures the Central Commission takes under Section 79(1)
(j) have to be in conformity with Section 178. One must understand
the reason why a regulation has been made in the matter of capping
the trading margin under Section 178 of the Act. Instead of fixing a
trading margin (including capping) on a case-to-case basis, the
Central Commission thought it fit to make a regulation which has a
general application to the entire trading activity which has been
recognised, for the first time, under the 2003 Act. Further, it is
important to bear in mind that making of a regulation under Section
178 became necessary because a regulation made under Section 178
has the effect of interfering and overriding the existing contractual
relationship between the regulated entities. A regulation under
Section 178 is in the nature of a subordinate legislation. Such
subordinate legislation can even override the existing contracts
including power purchase agreements which have got to be aligned
with the regulations under Section 178 and which could not have been
done across the board by an order of the Central Commission under
Section 79(1)(j).
*********
43. [..] While deciding the nature of an order (decision) vis-à-vis a
regulation under the Act, one needs to apply the test of general
application. On the making of the impugned 2006 Regulations, even
the existing power purchase agreements (PPA) had to be modified and
aligned with the said Regulations. In other words, the impugned
Regulations make an inroad into even the existing contracts. This
itself indicates the width of the power conferred on CERC under
Section 178 of the 2003 Act. All contracts coming into existence after
making of the impugned 2006 Regulations have also to factor in the
capping of the trading margin. This itself indicates that the impugned
Regulations are in the nature of subordinate legislation. Such
regulatory intervention into the existing contracts across the board
could have been done only by making regulations under Section 178
and not bypassing an order under Section 79(1)(j) of the 2003 Act.
Therefore, in our view, if we keep the above discussion in mind, it
becomes clear that the word “order” in Section 111 of the 2003 Act
cannot include the impugned 2006 Regulations made under Section
178 of the 2003 Act.”
63.Whilst there cannot be any doubt that regulations framed under the Act
can be made applicable to existing contracts, what is discernible from PTC
India (supra) is that in that case, the applicability of the Trading Margin
Regulations which for the first time, compelled persons engaged in trading of
46
electricity, in terms of Section 2 (17) of the Act, to register, obtain licenses, and
operate within the margin limits indicated in the regulations. These provisions
introduced a new regime, regulating an area, or activity which had hitherto been
unregulated. The entire edifice of prescribing general standards for application
to all those operating within its sweep, is to ensure that they are universal and
constitute a code. The observations in PTC India (supra), therefore, are to be
seen in this context. Being regulations of general application, dealing with a
range of commercial activity, there could have been no question of existing
contracts, operating in isolation, through separate silos, outside of their
framework. In the present case, however, the PPAs were entered into in the
exercise of equal bargaining power, after due negotiation by the parties, and
within the framework of existing regulations: both central and state. Therefore,
unless any later amendment expressly overrides existing contracts, the terms of
such agreements bind the parties.
64.That amendments to laws, or regulations, unless expressly retrospective,
are always prospective, is a settled proposition. In Purbanchal Cables &
Conductors (P) Ltd. v. Assam State Electricity Board & Ors.
33
, the position was
articulated in this manner:
“39. [..] This Court, time and again, has observed that any
substantive law shall operate prospectively unless retrospective
operation is clearly made out in the language of the statute. Only a
procedural or declaratory law operates retrospectively as there is no
vested right in procedure.
33 (2012) 6 S.C.R. 905
47
40. In the absence of any express legislative intendment of the
retrospective application of the Act, and by virtue of the fact that the
Act creates a new liability of a high rate of interest against the buyer,
the Act cannot be construed to have retrospective effect. Since the Act
envisages that the supplier has an accrued right to claim a higher rate
of interest in terms of the Act, the same can only be said to accrue for
sale agreements after the date of commencement of the Act i.e. 23-9-
1992 and not any time prior.”
65.In Commissioner of Income Tax v Vatika Township (P) Ltd.
34
, this court
observed, in this context, that:
“31. Of the various rules guiding how a legislation has to be
interpreted, one established rule is that unless a contrary intention
appears, a legislation is presumed not to be intended to have a
retrospective operation. The idea behind the rule is that a current law
should govern current activities. Law passed today cannot apply to
the events of the past. If we do something today, we do it keeping in
view the law of today and in force and not tomorrow's backward
adjustment of it. Our belief in the nature of the law is founded on the
bedrock that every human being is entitled to arrange his affairs by
relying on the existing law and should not find that his plans have
been retrospectively upset. This principle of law is known as lex
prospicit non respicit : law looks forward not backward. As was
observed in Phillips v. Eyre [Phillips v. Eyre, (1870) LR 6 QB 1], a
retrospective legislation is contrary to the general principle that
legislation by which the conduct of mankind is to be regulated when
introduced for the first time to deal with future acts ought not to
change the character of past transactions carried on upon the faith of
the then existing law.
32. The obvious basis of the principle against retrospectivity is the
principle of “fairness”, which must be the basis of every legal rule as
was observed in [L'Office Cherifien des Phosphates v. Yamashita-
Shinnihon Steamship Co. Ltd., (1994) 1 All ER 20 (HL)] Thus,
legislations which modified accrued rights or which impose
obligations or impose new duties or attach a new disability have to be
treated as prospective unless the legislative intent is clearly to give the
enactment a retrospective effect; unless the legislation is for purpose
of supplying an obvious omission in a former legislation or to explain
a former legislation. We need not note the cornucopia of case law
available on the subject because aforesaid legal position clearly
emerges from the various decisions and this legal position was
conceded by the counsel for the parties. In any case, we shall refer to
few judgments containing this dicta, a little later.”
34 (2014) 12 S.C.R. 1037
48
This proposition was again explained and applied in Union of India v.
Indusind Bank Ltd
35
.
66.In view of the above discussion, it is held that agreements, such as the
PPAs in the present case, entered into, voluntarily by the parties, before the
Second Amendment, were not affected, by its terms. The findings to the
contrary in the impugned order, are set aside.
Were the respondents coerced into entering into PPAs
67.The State Commission had concluded that the PPAs were also
unenforceable, to the extent of being in non-conformity with the pre-amended
Rule 5, of the REC Regulations, as the contracts were entered into by parties
with unequal bargaining power. This aspect was noted by APTEL, which held
as follows:
“9.19 [..] The State Commission after careful consideration of the
submissions made by both the parties and after due analysis of the
available material on record has recorded its findings in the
impugned order that the conditions envisaged in the PPA relating to
the tariff and other associated conditions appeared to be one sided in
favour of the Appellant and accordingly concluded the case of
coercion or duress and unequal bargaining power between the parties
being responsible for executing an Agreement full of unjustness and
perversity. In view of these facts, we hold that the State Commission
has analysed this issue rightly in accordance with law and passed the
order assigning cogent reasoning. Thus, we do not find any material
case or ground for our interference in the matter.
10. SUMMARY OF OUR FINDINGS:
Having regard to the careful consideration and critical analysis of the
facts and submissions of the learned counsel for the Appellants as
well as the Respondents, we hold that the findings of the State
Commission are just and right in accordance with law.”
35 (2016) 11 S.C.R. 700
49
68.In Transmission Corporation of Andhra Pradesh Ltd (supra), this court
observed, in the context of a contention of coercion, as follows:
“42. [..] To frustrate a contract on the ground of duress or coercion,
there have to be definite pleadings which have to be substantiated
normally by leading cogent and proper evidence. However, in the case
where summary procedure is adopted like the present one, at least
some documentary evidence or affidavit ought to have been filed
raising this plea of duress specifically.[..]”
69.In Shanti Budhiya Vesta Patel & Ors. v. Nirmala Jayprakash Tiwari&
Ors.
36
, this court held that to establish fraud or coercion, there should be“(a) an
express allegation of coercion or fraud, and (b) all the material facts in support
of such allegations must be laid out in full and with a high degree of precision.
In other words, if coercion or fraud is alleged, it must be set out with full
particulars.” The court had cited and applied the principle enunciated in
Bishundeo Narain v. Seogeni Rai
37
where it was held that:
“ […] Now if there is one rule which is better established than any
other, it is that in cases of fraud, undue influence and coercion, the
parties pleading it must set forth full particulars and the case can only
be decided on the particulars as laid. There can be no departure from
them in evidence. General allegations are insufficient even to amount
to an averment of fraud of which any court ought to take notice,
however strong the language in which they are couched may be, and
the same applies to undue influence and coercion. [See Order 6 Rule
4 of the Civil Procedure Code.]”
70.In New Indian Assurance Co. Ltd v Genus Power Infrastructure Ltd
38
this
court dealt with the standard of pleadings and evidence, needed in cases, where
coercion or duress is alleged:
36 (2010) 4 S.C.R. 958
37 (1951) 1 SCR 548
38 2014 (12) SCR 360
50
"8. It is therefore clear that a bald plea of fraud, coercion, duress or
undue influence is not enough and the party who sets up a plea, must
prime facie establish the same by placing material before the Chief
Justice/his designate.”
71.In the present case, this salutary rule was thrown to the wind, by the State
Commission. In this court’s opinion, APTEL, in the most cavalier fashion,
virtually rubber stamped the State Commission’s findings on coercion, in regard
to the entering into the PPA by the parties. There was no shred of evidence, nor
any particularity of pleadings, beyond a bare allegation of coercion, alleged
against Gujarat Urja. It is incomprehensible how such an allegation could have
been entertained and incorporated as a finding, given that the respondents are
established companies, who enter into negotiations and have the support of
experts, including legal advisers, when contracts are finalized. The findings
regarding coercion are, therefore, wholly untenable. This court is also of the
opinion that the casual approach of APTEL, in not reasoning how such findings
could be rendered, cannot be countenanced. As a judicial tribunal, dealing with
contracts and bargains, which are entered into by parties with equal bargaining
power, APTEL is not expected to casually render findings of coercion, or fraud,
without proper pleadings or proof, or without probing into evidence. The
findings of coercion are therefore, set aside.
Conclusions
72.In view of the foregoing discussion, it is held that the concurrent findings
and orders of the State Commission and APTEL cannot be sustained. They are
51
accordingly set aside. The appeals are allowed, with costs payable to the
appellants.
.................................................J.
[SANJAY KISHAN KAUL]
................................................J.
[S. RAVINDRA BHAT]
...............................................J.
[M. M. SUNDRESH]
New Delhi,
April 13, 2023
52
ITEM NO.1501 COURT NO.13 SECTION XVII
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 3480-3481/2020
GUJARAT URJA VIKAS NIGAM LIMITED & ORS. Appellant(s)
VERSUS
RENEW WIND ENERGY (RAJKOT) PRIVATE LIMITED & ORS.Respondent(s)
([ HEARD BY HON'BLE SANJAY KISHAN KAUL, HON'BLE S. RAVINDRA
BHAT AND HON'BLE M.M. SUNDRESH ,JJ. ]
IA No. 77529/2020 - GRANT OF INTERIM RELIEF)
Date : 13-04-2023 These matters were called on for hearing
today.
For Appellant(s) Ms. Hemantika Wahi, AOR
Ms. Jesal Wahi, Adv.
Ms. Srishti Khindaria, Adv.
For Respondent(s) Ms. Nishtha Kumar, AOR
Mr. Vishal Gupta, AOR
Mr. Nikilesh Ramachandran, AOR
Mr. Nitin Saluja, AOR
UPON hearing the counsel the Court made the following
O R D E R
Hon’ble Mr. Justice S. Ravindra Bhat pronounced the
reportable judgment of the Bench comprising Hon’ble Mr.
Justice Sanjay Kishan Kaul, His Lordship and Hon’ble Mr.
Justice M.M. Sundresh.
It is held that the concurrent findings and orders of the
State Commission and APTEL cannot be sustained. They are
accordingly set aside. The appeals are allowed, with costs
payable to the appellants in terms of the reportable judgment.
Pending application(s), if any, are disposed of.
53
(HARSHITA UPPAL) (MATHEW ABRAHAM)
SENIOR PERSONAL ASSISTANT COURT MASTER (NSH)
(Original signed Reportable Judgment is placed on the
file)
Legal Notes
Add a Note....